The number of problems reported to Citizens Advice about payday loans have almost halved.

The charity helped with 5,554 payday loan problems in January to March 2015, a fall of 45% on the same period in 2014.

New evidence from the national charity reveals a steady decline in payday loan problems from April 2014 as new regulations were introduced by the Financial Conduct Authority and the regulator took enforcement action against lenders.  It also shows a further drop when the government introduced the cap on payday loans on 2 January 2015.

While an initial reduction in payday loan problems is welcome Citizens Advice says it is important focus remains on the industry to ensure problems continue to decline.

It also calls for other high cost credit products, such as logbook and guarantor loans, to come under similar scrutiny after the charity finds they are causing significant harm to some borrowers.

Nearly 53,000 logbook loans were taken out last year, up 44% on 2011.  Issues reported to Citizens Advice include high interest rates, excessive fees and charges and aggressive behaviour when collecting debts.

Borrowers can take out a guarantor loan by getting a friend or family member to act as their ‘guarantor’. This means if the borrower can’t repay the loan the guarantor has to.  Analysis from Citizens Advice suggests proper checks aren’t being carried out to assess that the guarantor has actually agreed to back the borrower or can afford the repayments if the borrower stops paying.

A new Citizens Advice study out later this month, based on interviews with major high street banks, finds a quarter of payday loan users could have borrowed money from their own banks instead of payday lenders.

Citizens Advice chief executive Gillian Guy said: “Irresponsible high-cost lenders are sentencing people to a life in debt. The drop in the number of problems reported to us about payday loans is good news for consumers and demonstrates the impact a strong stance against irresponsible lending can have on people’s lives.

“It is important to remember that it is not just payday loans that have blighted people’s finances.  Other high cost lenders like guarantor or logbook loans are also causing havoc with people’s finances.

“Following concerns raised by Citizens Advice the regulator and government made a concerted effort to tackle payday lenders.  Similar efforts are required for other high-cost credit companies.  With a history of causing serious harm to borrowers, payday lenders still need to be kept under a watchful eye.

“Anyone looking to take out short-term credit needs to asses whether it is affordable and shop around for the best deal, including checking with their own bank.  When loans aren’t affordable debt advice can help people get their finances back on track.”

The Citizens Advice study also looks at whether there is a valid and responsible role banks can play in providing short-term credit.  It finds that banks were unwilling to lend to many payday loan customers because they wouldn’t have met affordability checks or due to previous credit problems including missed payments.  However where lending was a viable option customers would have been able to get an arranged overdraft instead of resorting to a payday loan.

The study highlights how it was often the online application process and instant access to money that appealed to payday loan customers. With arranged overdrafts offering a similar service it is important customers know that this may be an option for emergency finance. But Citizens Advice says banks need to make sure overdraft fees are fair and easily understood by customers.